Just as many people set personal resolutions, the start of the new year is a great opportunity for brands to revisit their business strategy and objectives. To do this effectively, companies must look forward and develop predictions as to how new technologies and evolving trends will affect the commercial landscape — including not only which products will sell, but how those products will get to consumers. To help inform this strategy, four industry experts (including me) weighed in on which trends we’ll be looking for in the 2018 supply chain.
Automation is here to stay…
Automation isn’t new to the game and only will continue to gain traction in 2018, especially in the physical supply chain where, according to ShipMonk CEO Jan Bednar, automation technologies are able to address many fulfillment challenges and expedite the day-to-day tasks of warehouse employees. This trend will gain traction in 2018, especially as labor costs continue to rise. Although in the past most organizations focused on finding the least expensive place to do business – whether it was China, Mexico or the Philippines – now that labor costs are increasing around the world there is a huge demand for automated systems that can reduce human roles on the production line.
Outside of its ability to create a more simplified workflow, automation has the opportunity to be further integrated into the warehouse. Uwe Weinkauf, CEO of MW2 Consulting, suggests that as automation gains traction in the supply chain industry, it will direct many material handling equipment (MHE) manufacturers toward the use of warehouse robotics, which can help streamline distribution center operations without requiring major structural changes.
…and so is AI
Artificial intelligence (AI) will also rev up in 2018. that While AI is already being used in the physical supply chain to transform the way warehouses operate, it will be integrated into all aspects of the supply chain, and specifically to demand planning. As data plays a larger role in demand planning, brands are forecasting at many different levels simultaneously. Machine learning, when introduced to the forecasting process, is able to look at data streams and recommend which forecasting algorithm has the most predictive power. This prepares companies to respond to the complexities 2018 is bound to bring.
Embrace the digital
The shift toward e-commerce is nothing new, but recent trends show that now even luxury brands — which have long relied upon the exclusivity of their brick and mortar stores — are getting into online sales. In order for this to work, however, luxury brands need a luxury online experience to ensure customers continue to receive the same best of breed service as they would in stores. This means more companies are looking for a single supply chain partner to help manage the flow of products and services across both the physical and digital supply chains as they converge into one—facilitating a simplified end-to-end experience with no added burden to consumers.
In 2018, it won’t be enough for companies to have just embraced digital transformation; they must also add value to the digital strategies and tools they already have, predicts Paul Trudgian, supply chain development consultant at Paul Trudgian Ltd, Supply Chain & Logistics Consultancy. Trudgian emphasizes the growth of digital supply networks (DSN), which integrate information, finance, and talent from different sources to drive customer business objectives, and believes that companies which learn how to utilize a DSN can create a more flexible, adaptable, and scalable supply chain — gaining an edge over competition in 2018.
The rise of webrooming
Webrooming, or the concept of a consumer visiting a showroom to test out a product before purchasing the item from an online store, is on the rise. “Don’t write-off your physical presence and go solely digital yet,” said Trudgian. In today’s omnichannel market, consumers still want a personal, tactile experience where they can visit a showroom and touch and feel a brand’s products, but also the ability to leave that store and make a purchase online, while still taking advantage of all available discounts and click-to-collect approaches.
The rise of subscription models
As consumer demands have heightened, expecting nearly instant delivery of products, subscription models have gained popularity because they allow brands to anticipate a customer’s needs and deliver products to them without missing a beat — all the while avoiding the high cost of immediate fulfillment. The model also promotes customer loyalty. When consumers subscribe to a brand, they are dedicated to that brand exclusively for a period of time. Plus, as IoT moves further into the space, brands can measure when consumers need refills — allowing them to anticipate fulfillment needs, increase efficiency across the physical supply chain and lower freight costs. Consumers, in turn, can be happy they aren’t breaking the bank.
Outside of the subscription model, brands that conduct a significant amount of business online need to be aware of, how the influx of returns — items purchased online are returned at a much higher rate than those purchased in-store — might throw off expected inventory numbers or create a backlog of products in the distribution center and fulfillment phase, cautioned Bednar.
Focus on the customer experience
The heart of the 2018 supply chain will be improving not just the experience, but the expectations of the customer. With the speed at which customer expectations are changing, companies need to be able to leverage digital tools and technology to just as quickly assimilate, innovate and meet those needs. Trudgian suggests that brands consider securing data exchange processes, live system integration, heightened visibility, enhanced tracking, and networking and collaboration that unite the supply chain. As data becomes more important to brands, supply chain partners will need to continuously add value to a customer’s supply chain by moving away from commoditized solutions and focusing more on helping customers reach their bottom line faster and less expensively.
The 2018 supply chain is already characterized by uncertainty, with digital transformation presenting brands with new opportunities and tools, as well as new complexities. Those that can embrace these trends, and remain flexible, will pull ahead of competitors in the year to come.